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SG Indonesia eyeing property curbs

Property Here - Friday, July 12, 2013

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In a bid to ease inflation and strengthen the weakening rupiah, Indonesia's central bank plans to implement new measures to address rising home prices and tackle a shortage of US dollars.

According to Bank Indonesia Governor Agus Martowardojo, inflation is nearing the upper end of its forecasted range of 7.2 to 7.8 percent for 2013. As such, the central bank will introduce measures if price gains reach such levels.

In June, the central bank raised its official rate for the first time since 2011, ahead of a hike in subsidised fuel prices. At a monthly meeting this week, it is expected to raise its key rate to 6.25 percent, according to 13 of 19 economists polled by Bloomberg News, while three predict a half-point move and the rest see no change.

“We’ll formulate a policy mix as we see that the impact of the fuel price is more than we were expecting,” said Martowardojo. “We can respond with a property rule and we’ll add forex supply in the market.”

As of yesterday, one dollar is equivalent to 9,965 rupiahs, revealed prices compiled from local banks. It has declined by over five percent in the past 12 months, or the worst performer after the Japanese yen and the Indian rupee among 11 Asian currencies monitored by Bloomberg.

Andy Ji, a Singapore-based currency strategist at Commonwealth Bank of Australia, said Indonesia's central bank will keep the exchange rate within 10,000 rupiahs per one dollar.

In May, Bank Indonesia Deputy Governor Perry Warjiyo announced they are eyeing tougher loan-to-value rules for properties in regions where demand is growing too quickly.



Nikki De Guzman, Junior Reporter at PropertyGuru, wrote this story. To contact her about this or other stories email nikki@allproperty.com.sg